A FULL Bench of the Fair Work Commission has upheld an earlier single member decision that Anglo American subsidiary, Capcoal, was not in breach of its good faith bargaining obligations when it made the decision to make more than 80 employees redundant during a period of prolonged industrial action.
The CFMEU’s failed appeal on good faith bargaining grounds came a week after separate Federal Court proceedings found the redundancies may be in breach of the Fair Work Act’s (the Act) adverse action provisions.
The matter, which is yet to reach final determination by the Federal Court, is being closely monitored by industry and legal practitioners given its implications for the ability of employers to make significant commercial decisions, such as reducing labour overheads, during periods of industrial action.
Single member decision:
As previously summarised by AREEA, in late 2016, FWC Deputy President Asbury dismissed an application by the CFMEU for orders preventing Capcoal from making more than 80 employees involved in industrial action at the German Creek Colliery coal mine redundant.
While the union argued the planned redundancies were linked to the enterprise bargaining period and thus Capcoal was in breach of the Act’s good faith bargaining provisions, the Deputy President disagreed.
Asbury DP found that Capcoal did not engage in ‘capricious or unfair conduct’ that undermined the freedom of association or collective bargaining contrary to good faith bargaining requirements when it made the employees redundant.
Noting that prolonged strike action presents risks to both employers and employees, she accepted the employer’s evidence that the redundancies were due to commercial opportunities only identified after the employee’s went on strike.
Full Bench backs Asbury DP:
In the latest development to this case, the CFMEU failed in its Full Bench appeal after unsuccessfully arguing that Asbury DP had erred in finding that Anglo American’s conduct was neither ‘unfair nor capricious’.
In determining the matter, a Full Bench comprising Vice President Catanzariti, Deputy President Dean and Commissioner Saunders, considered whether Asbury DP had erred in her assessment of Capcoal’s conduct.
In backing Asbury DP’s assessment, the Full Bench accepted the facts that if Capcoal adopted the restructure that would see more than 80 employees made redundant, the company would save $40 million over three years.
“The Respondent’s adoption of (the restructure) was, in our view, a legitimate response to the commercial and operating circumstances which the Respondent found itself in as a result of the protected industrial action,” the Full Bench ruled.
“The Respondent, in adopting this option, was, in our view, motivated by, and acted in accordance with, its legitimate business concerns.
“For the reasons outlined above, we are not persuaded that the Deputy President’s evaluative assessment of the Respondent’s conduct was vitiated with error and, in particular, we agree with the Deputy President’s finding that: ‘It is not unfair for an employer suffering loss and damage as a result of employees taking industrial action to decide, on legitimate business grounds, to restructure its business to manage or offset that loss and damage, and to decide to make employees redundant in the process’.”
The appeal was dismissed on the grounds the Asbury DP was correct in finding that the company’s actions were not unfair or capricious.
“It is unfortunate that 83 employees will lose their employment, especially considering that employment can be difficult to gain and maintain in central Queensland. However, in circumstances where the Respondent has met its good faith bargaining requirements under the Act, there is no basis to remedy this unfortunate situation by making a bargaining order,” the Full Bench stated.
Click here to read the Full Bench decision.
Federal Court adverse action issue looms:
Despite having its course of action backed by the Fair Work Commission, Capcoal still faces an anxious wait for the Federal Court to hand down its final determination on whether the redundancies are in breach of the Act’s adverse action provisions.
In an interim decision last week, the Court reinstated two employees at the mine after finding that adverse action may have taken place.
If the Federal Court is to reinforce this finding in its final determination, it would likely prompt the CFMEU to lodge further applications in the jurisdiction to have 31 of its members already made redundant reinstated on adverse action grounds.
Implications for employers
The full implications for employers will not be known until the Federal Court hands down its final determination.
However, the Full Bench decision is a positive sign for the ability of an employer to make difficult and/or contentious business decisions during periods of industrial disputation. It reinforces that just because a business decision is made during bargaining and as a by-product of striking, that does not mean such an action is causally linked to the strike.
It is important to note that the Full Bench did state in its ruling: “Employers will be at risk of breaching their good faith bargaining obligations under section 228(1) (e) of the Act if they make employees redundant without having legitimate business reasons for doing so.”
Therefore, any employer in similar circumstances to Capcoal will need to have a strong business case to justify making employees subject to bargaining and/or industrial action redundant.
For more information about this matter or for any advice relating to enterprise bargaining, managing industrial action or workforce restricting, contact one of AREEA’s specialist workplace relations consultants via your local AREEA office.